Gold falls on steady dollar; eyes on Greece, China

Gold closed below $1,200 an ounce on Monday as the dollar steadied, while traders were assessing risks that Greece's may default and China's new policy measures to shore up the world's second-largest economy.

U.S. gold futures for June delivery settled down $9.40 at $1,193.70 an ounce, while spot gold was down 0.9 percent at $1,194 an ounce.

The dollar was up 0.5 percent versus a basket of leading currencies on Monday, having suffered a near 2 percent drop last week as underwhelming U.S. data prompted the market to trim long positions.

U.S. inflation data on Friday that indicated the U.S. Federal Reserve could start raising interest rates this year failed to boost the greenback.

The Fed's policy meeting later this month will be eyed for stronger clues about the timing of a rate hike.

An early rate hike could diminish demand for bullion, a non-interest-paying asset.

"The uncertainty about interest rate hikes is opening the door for gold strength and then should there be serious concerns about some geopolitical elements in Greece or elsewhere, that is going to boost gold," ING Bank senior strategist Hamza Khan said.

"For now, the Greece situation hasn't really led to a stronger dollar...but equally we are not really seeing a flight to safety."

Euro zone deputy finance ministers will meet midweek ahead of a Eurogroup finance ministers' gathering two days later, a Greek government official told Reuters, as Athens and its creditors continue to seek a deal on reforms to unlock aid.